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Construction News

Happy New Year to you all!

Against the backdrop of another lockdown, the construction industry is to be commended for continuing to work on projects in very difficult circumstances. Since the start of the New Year there have been a few developments worth noting:

  1. 7 January: CLC Seventh Site Operating Procedures published: https://www.constructionleadershipcouncil.co.uk/news/site-operating-procedures-version-7-published/

  2. 8 January: RICS public consultation opens on guidance for the valuation of buildings with cladding: https://www.rics.org/uk/news-insight/latest-news/press/press-releases/new-consultation-as-guidance-aims-to-improve-consistency-in-ews1-requests/: our recent articles on the Grenfell tragedy here Grenfell- planning for fire protection and Grenfell Tower - taking action

  3. Government £30 million fund to pay for the costs of installing an alarm system in buildings with unsafe cladding opens, including retrospective recovery of cost of alarms installed after 17 December 2020 and a deadline for submission of 30 June 2021: https://www.gov.uk/guidance/waking-watch-relief-fund.

Grenfell- planning for fire protection

Since our article, Grenfell Tower- taking action, The Town and Country Planning (General Permitted Development) (England) (Amendment) (No. 4) Order 2020 has been made. Coming into force on 30th of December 2020, it requires that an applicant seeking prior approval of a development of an existing building of 18 meters or more, must provide a report from a chartered engineer (or other relevant professional) confirming that the external wall structure adequately resists the spread of fire over the walls and from building to building.

Grenfell Tower - taking action

Before the night of 14th June 2017, to most people around my age, Grenfell was Joyce Grenfell the comedienne who delivered quirky monologues as a strict school mistress. Now Grenfell means tragedy. The impact of Grenfell has been rippling through the construction industry and the emergency services ever since that night. Recently, we had harrowing testimony from those involved in the design and construction of the refurbishment.

In response to the Grenfell disaster, the Government commissioned an Independent Review into Building Regulations and Fire Safety by Dame Judith Hackitt, which was published on 17 May 2018. The review introduced the notion of a ‘Golden Thread’ of information about structural and fire safety, which is reflected in the Building Safety Bill (the Bill) published on 20 July 2020. It is intended that design and fire safety information will be held digitally in accordance with specified standards and will weave through the various stages of the construction process and into occupation.

Assignment – accrued and future rights

Energy Works (Hull) Ltd v MW High Tech Projects UK Ltd and OUTOTEC (USA) INC [2020] EWHC 2537 (TCC) concerned a power plant. The main contract was an amended IChemE Red Book 5th edition, 2013 and the subcontract an amended IChemE Yellow Book 4th edition, 2013. The main contract was terminated by the Employer (EWHL) and the subcontract was assigned to EWHL. All well and good, until EWHL commenced proceedings against the contractor (MW) for damages estimated to be in the sum of £133m for the costs of rectifying defects, delay damages and additional costs. MW disputed the claim and pursued a counterclaim against EWHL. MW sought to claim against the subcontractor (O) in respect of sums claimed by EWHL.

The Court had to decide preliminary issues as to the effect of the assignment from O to EWHL and whether MW could pursue its claims against O as direct claims under the sub-contract or under the Civil Liability (Contribution) Act 1978 (CLA).

No More Reverses on VAT Reverse Charge

Despite being delayed on two occasions, HMRC’s Domestic Reverse Charge for Building and Construction Services (VAT Reverse Charge) starts in the Spring of 2021.

This means that the construction sector has another change to grapple with, against the already uniquely challenging Covid-19 backdrop.

The VAT Reverse Charge is to help combat organised crime groups operating within the construction industry. We all know what these criminals do - charge VAT and never account to HMRC for it. However, moving the obligation to pay VAT to HMRC up the supply chain impacts on the cashflow of contractors and subcontractors.

Who is affected by these changes,and when?

Contractors and subcontractors who are registered for the purposes of the Construction Industry Scheme (CIS) and receive building and construction services from others will be required to pay those others net of VAT and account for the VAT to HMRC.

New protection for office-based staff:

Like every other profession, construction is calibrating to the new normal. For the latest on new normal in the office, please have a look at:
https://www.gov.uk/guidance/working-safely-during-coronavirus-covid-19/offices-and-contact-centres

The construction team will continue to work from home, with admin functions performed by a support team based in the office. We worked at home a lot before the pandemic, so it is pretty much business as usual.

Continued support for construction clients

We continue to support our construction clients, assessing risk on existing and prospective projects in the light of the pandemic.

Health risk is, of course, a top concern and we are pleased to see at https://www.gov.uk/government/news/further-expansion-of-access-to-coronavirus-testing-helps-protect-the-most-vulnerable that: “construction workers to emergency plumbers, research scientists to those in manufacturing - can now be tested”.  “All they need to do is go on the internet and apply for a test.”

April 8 - Construction Unit Update: Coronavirus

We continue to adapt as we help our clients work out whether to keep sites open during the lockdown and how to operate contract provisions rarely looked at before this pandemic was declared. It is looking likely that the lockdown will be extended and in England at least it is business if possible on construction sites. Scotland and Wales may plough their own furrow.
The latest guidance (7 April) for keeping workers safe is at:

 

A message from the Construction Unit, to our clients past, present and future


Like you all, we are working under very different conditions. Sean and Jan are used to working from home so the transition to home working has been straightforward. The only change is that callers may hear a dog barking in the background; we are working on some training on that issue! Our first concern is for people’s physical and mental well-being, but we know some employers, contractors and sub-contractors are worried about paying and getting paid on time.

We are happy to discuss options with you from the legal to the practical. There is no charge for an initial phone discussion, and we are open to no win no fee arrangements on suitable cases. Our debt recovery department works on a percentage of fee recovered; that might be of interest to some.

BREXIT: 11pm on 31 January 2020- some thoughts


Here in the construction unit, we have been pondering how to mark Brexit day. As lawyers, we are encouraged to consider mediation as a way of resolving disputes cheaply (relatively) and quickly. We know though that despite the court liking for mediation, there are some disputes that are simply not suitable for mediation. Brexit differences seem to fall into that category; discussion of Brexit rarely results in a change of position or a meeting of minds, rather a retreat to the trenches.

A New Case on Novation

This is the last Construction Unit news before the Christmas break and we wish you all an enjoyable break, whether or not it is a time of celebration for you.

The legal principle of unjust enrichment relied on by the Claimants in the December 2019 case of Munkenbeck [2019] EWHC 3225 in the Technology and Construction Court is rather esoteric, but this case will be of interest to consultants and contractors with novated appointments and building contracts.

Unjust enrichment involves the unjustly enriched paying the enricher the value of the benefit received. It can be claimed without a contract.
The case is lengthy, so in a nutshell:

Head of Construction attends the Adjudication Society Annual Conference

Our Head of Construction, Jan Grimshaw, attended the Adjudication Society Annual Conference on 7 November for an update on all matters adjudication, particularly the interplay between enforcement of adjudication decisions and the tactical use of CPR Part 8.

The next day Jan attended the Chancery Lane Project, a climate change conference for lawyers, spending the day discussing and working up ideas for "greening" contracts and workplaces.

Thanks to the Chancery Lane Project for organising this stimulating event. The Chancery Lane Project is inviting lawyers to host their own collaborative environment problem solving event. If you would be interested in attending or co-hosting an event in the Bristol area, please get in touch on jan.grimshaw@daviesandpartners.com.

 

Future Homes Standards- consultation closing 10 January 2020

Of interest to all involved in constructing houses, the Ministry of Housing, Communities and Local Government consultation ‘The Future Homes Standards’ is the first of two consultations on new standards for housing and is focused on changes to the Building Regulations, Part L (conservation of fuel and power) and Part F (ventilation) for new dwellings.

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